Combining Proof of Stake (PoS) with a unique Proof of History (PoH) consensus mechanism allows Solana (SOL) to provide a fast, safe and efficient network for it's users. In this subsection of the Solana Coin Guide let's give a look into the factors to be considered in a decision on whether or not to invest in Solana (SOL) in 2021.
IN FAVOR OF INVESTING IN SOLANA
- The blockchain trilemma is a true thorn for blockchain technology (Speed, safety and decentralization). Solana is taking the trilemma head-on and if successful could provide a hefty payout in the future.
- Solana operates as an ultra efficient blockchain using far less energy which permits it to be able to pass on some of the lowest transaction costs to its users.
- There are currently more than 250 projects based on the Solana system.
- Solana has a low total supply.
- Investor's may stake their Solana coins in cold storage wallets earning a huge reward (more than 20,000% since launch).
- Solana has actual real world use cases as it allows for instant payments to businesses and due to its high security, users need not worry about credit card compromise
- Solana has entered into several high profile partnerships including: Circle (USDC), Chainlink, and Kik (Kin).
- Solana processes more than 1000 transactions/second compared to Ethereum's processing speed of 14 transactions per second. Theoretically, Solana's maximum throughput is a huge 50,000 transactions/second.
- Since it's all time low in 2020, Solana's price has appreciated more than 6000%, outperforming both Bitcoin and Ethereum in this regard.
- At the time of the writing of this subsection, per CoinMarketCap, Solana is reasonably priced at $43.24 (August 13, 2021 @ 11.19 EDT). As stated above Solana has a low circulating supply of 284,432,517.33 SOL giving Solana a market capitalization of $12,213,117,261. The maximum number of coins for supply is 501,620,948 SOL translating into a fully diluted market capitalization of $22,082,593,237. Solana is currently ranked the number 11 cryptocurrency by CMC.
FACTORS AGAINST INVESTING IN SOLANA
- Solana is a very young enterprise without much history evident.
- In addressing the blockchain trilemma, Solana uses eight different very complicated technologies. These technologies have not totally solved the trilemma (but has moved the solution forward).
- The Solana team has yet to hit all its goals and milestones which has impeded movement of Solana into the mainstream. Serious price appreciation in the Solana (SOL) coin is dependent upon the team meeting it's goals.
- Overall ecosystem growth of Solana is dependent on the team meeting it's goals and approaching as near as a technically practicable solution to the blockchain trilemma to cement it's use case position.
No decision on whether to invest in a cryptocurrency can be made in the absence of a review of the asset's price history. As regards Solana (SOL):
- The token started trading at around $0.5, according to data from CoinMarketCap. There wasn’t much action until July 2020, with the price mostly consolidating between $0.5 and $0.8.
- Around mid-July, SOL crossed $1 then started picking up momentum at a time when the world economy was crippling under the force of the COVID-19 pandemic. However, since the pandemic was mostly detrimental around March, Solana might have missed the most devastating part by a few months.
- So, by the start of September, the coin had risen as high as $4.7, then just as quickly, dropped to $2 towards the end of September.
- From there, SOL fought not to go below $1 and only came close to doing so towards the end of October.
- In late 2020, a market-wide bull run started, but Solana didn’t join until around late January 2021. This marked the beginning of its biggest price momentum so far.
- The upward trajectory was so sharp that by February 25th, SOL was hovering above $16 after rising by close to $7 in a week. The price fluctuated slightly going forward, and one month later, on March 25th, SOL was trading at $13.03 per token.
- The subsequent months recorded one of the wildest price rides in Solana’s history. By the start of April 2021, the token had climbed to $19.08 and more than $27 a week later. It then slightly dropped to $25 in mid-April, then by April 25th, it had skyrocketed to more than $47.
- That is a staggering 88% increase in about two weeks. But the bull run didn’t end there.
- At the start of May, SOL was trading at more than $49. It slightly dropped to $43 a week later and $41 on May 13th. Then just as price experts expected a further downtrend, Solana started shooting again, and at around mid-May, it achieved its current all-time high price of $58.30, according to CoinMarketCap.
- The market-wide bull run that started in January 2021 started signing out towards the end of most, and most cryptos lost their value. Solana was not spared. After achieving its ATH price, the token dropped to as low as $24.69 on May 23rd 2021.
- There was a lot of price fluctuation in June and the first half of July. However, SOL has not gone below $25 since then ....
[Trading Education. Is It Worth Investing In Solana?. (Accessed August 12, 2021)].
And as noted above, Solana is now trading in the $42/$43 price range.
This price history, in chart form, appears as follows:
A very bullish look at price predictions for the Solana (SOL) coin through 2028 is presented from Wallet Investor:
And finally, a one-year price prediction is presented from Trading Education:
Please keep in mind that while these price predictions paint a rosy future for Solana (SOL) as an investment, they are just that - predictions. No one has a crystal ball that can guarantee future performance. As such, as a potential investor you may take the prediction for what it is, as the same is no guarantee of future price performance of Solana (SOL) due to the volatility of the cryptocurrency markets.
CONCLUSION
This subsection has provided you, the potential investor in Solana (SOL), with the key elements to consider in reaching a final decision on this token. In reaching a final investment decision many differing opinions should be sought out. Reliance on one source is highly discouraged.
It is a given that every individual investor possesses a different present financial circumstance, tolerance for risk, and investment strategy. These must be weighed in light of the factors and information above provided in finalizing any investment decision.
Please remember, this subsection of the Solana Coin Guide is merely a starting point and should not be deemed a substitute for doing your own diligent research. And as always, never invest more than you can afford to lose. Good luck!